By Bill Dries

Behind the Headlines

The leaders of the Memphis police and fire unions say they will sue the city over changes in employee health insurance approved this month and are prepared to add pension changes to the litigation if the council approves those changes next month.

“From my point of view, the administration has left us no choice but to try to make changes through litigation,” said Thomas Malone, president of the Memphis Fire Fighters Association on the WKNO-TV program “Behind The Headlines.” “We feel like on some of the proposed pension changes – we feel like that it’s a violation of the law.”

“Most definitely there’s going to be litigation,” he said on the same program. “More than that, I am concerned about the safety of the citizens.”

The program, hosted by Eric Barnes, publisher of The Daily News, and including Memphis City Council member Wanda Halbert, can be seen on The Daily News Video page, video.memphisdailynews.com.

The council approved the health insurance changes last week that essentially take the city subsidy out of health care insurance and raise premiums for employees by 28 percent. The council votes in July on pension plan changes that put all city new hires and city employees with under 10 years of service into a defined contributions plan similar to 401(k) retirement plans that many in the private sector have.

City employees and municipal union leaders argue such a change in pension plans is unfair because city employees don’t contribute to and are not covered by Social Security.

Savings from both sets of changes go toward increasing the city’s annual contribution toward a $551.9 million unfunded pension liability that, by state law, the city has six fiscal years to fully fund at $78.3 million a year.

The city currently makes an annual required contribution of $20 million a year. Actuaries, consultants and the Tennessee Comptroller’s office have said the low post-recession funding of the pension plan has made the plan unsustainable and that the health insurance plan is also unsustainable.

Halbert was among those on the council who voted against the health insurance change and the city’s budget for the fiscal year that begins July 1. She says changes are needed, but she argued the slope of those changes is too severe and ignores other areas where there could be savings, including big ticket capital projects funded by bond debt.

“It didn’t happen overnight so why in the world would we attempt to fix this overnight?” she said. “It’s impossible.”

Meanwhile, Memphis Police Director Toney Armstrong appeared to part company with Memphis Mayor A C Wharton Jr. as the weekend began.

Armstrong told reporters he hopes the council will reverse the health insurance changes.

“Certainly anything that is done could be undone. And we certainly hope that at the conclusion of the process that some of the things done will be overturned,” Armstrong said Friday, June 20. “There is a process. You have to respect the process. Certainly I don’t necessarily agree with the decision the council made. … At the end of the day we are going to continue to do our job.”

But Armstrong was not specific about whether he was talking about an immediate reversal of last week’s council decision on health insurance or something more gradual, like a pledge to change such benefits if and when the city’s financial position improves.

“We’ve been through a lot in the three years I’ve been here,” Armstrong said of his tenure as police director. “Certainly this is another something that we didn’t expect.”

But the council and mayor have been moving toward a vote on some kind of changes since April when Wharton presented his budget to the council. The council and mayor have been discussing changes to health insurance coverage and pension plan changes since last year’s budget season was jolted by a letter from Tennessee Comptroller Justin Wilson questioning and criticizing the city’s financial stability.

During that discussion, council members have talked with Wharton and Armstrong separately, making it clear that the council would be weighing decisions in the current budget season that moved further into changes in public safety spending and benefits.

Armstrong said the changes are having an impact on morale in his ranks and making it hard to recruit officers. Police got a new recruit class of 99 in the new fiscal year to come but 165 officers have left the force in the current fiscal year.

“At the end of the day, my message is that we took an oath. … regardless of what happens on this end, there won’t see a citizen that should suffer for that,” he said. “You have to understand that I am going to maintain a professional attitude throughout this. I am going to insist that they maintain a professional attitude through this.”